The Rhode Island General Assembly passed and Governor Donald Carcieri signed into law Tax Credits for Contributions to Scholarship Organizations in June 2006. Beginning in 2007, the program will allow Rhode Island businesses to donate funds to scholarship organizations that provide low-income students tuition assistance grants to attend qualified nonpublic schools of the parents’ choice.
A business may receive no more than $100,000 in credit, and the total amount of credits the state will allow is capped at $1 million. The business will receive a credit equal to 75 percent of the actual amount contributed. If the business makes a commitment to donate two years in a row, the amount credited rises to 90 percent of the actual amount contributed. The credit is nonrefundable (cannot exceed the company’s tax burden) and cannot be carried over to the next tax year.
Each scholarship organization must operate as a nonprofit and is required to allocate at least 90 percent of its revenues to scholarships. Donors may not specify that a scholarship must go to any particular student or school. The bill does not prescribe how much each scholarship is worth but does require the scholarship organization to report to the state the dollar range and number of scholarships granted.
School-age students (K-12) are eligible to receive the scholarships if the family income is no more than 250 percent of the federal poverty line and the student has successfully registered at a qualified school. Any nonpublic school located in Rhode Island that meets state guidelines for nonpublic schools may accept scholarship payments.